Moreno industries has adopted the following production budget for the first 4 months
Month Units
January 10,000
February 8,000
March 5,000
April 4,000
Each unit requires 3 pounds of raw materials costing $2 perpound. On December 31, 2008, the ending raw materials inventory was9,000 pounds. Management wants to have a raw materials inventory atthe end of the month equal to 30% of next months productionrequirements.
Instructions:
Prepare a direct material purchase budget by month for thefirst quarter.